Istanbul bourse up 8.32% following earthquake-related closure

Turkish authorities issued a series of regulations on Tuesday to ease the blow to equities markets ahead of today's re-opening. The government introduced measures to prevent a plunge in the stock exchange including regulations to encourage company share buyback programs, and increasing obligatory pension fund allocations for stocks.

The Turkish bourse opened 5.86% higher on Wednesday and is trading up 8.32% following five days of closure and steep losses in the aftermath of devastating earthquakes that prompted measures to avoid a steep decline in stock prices.

Borsa Istanbul halted trading on its equity and derivatives markets two days after the earthquakes that claimed more than 40,000 lives in Turkey and neighbouring Syria. Turkish authorities issued a series of regulations on Tuesday to ease the blow to equities markets ahead of today's re-opening.

The government introduced measures to prevent a plunge in the stock exchange including regulations to encourage company share buyback programs, and increasing obligatory pension fund allocations for stocks. On Tuesday, the withholding tax of share buyback programes was cut to zero from an earlier 15%, in a move to encourage companies to buyback shares to stabilize their market value in the stock exchange.

Several listed companies, including the flag carrier Turkish Airlines and lenders Isbank, Halkbank and Vakifbank have announced some 16 billion lira worth of share buyback programs since Tuesday, according to a Reuters tally. Under another regulation, the authorities increased the mandatory allocation of shares in the government-sponsored part of the pension scheme to 30% from an earlier 10% which will allow some 8-9 billion lira to flow to the stock exchange, according to analysts.

Additional measures could still be needed to stabilize the stock exchange, according to Tunc Satiroglu, strategist and founder of financial consulting firm Kanal Finans. The country's benchmark index had fallen as much as 16% from the previous week's close before trades were cancelled last Wednesday. In the two days following the earthquake, the index dipped some 9.9%.

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